LCD Drive IC Vendors Cut Supplies on Uncertain Prospects

Taipei, Oct. 19, 2009 (CENS)--Taiwan's LCD drive IC vendors have cut down foundry contracts in light of LCD-panel makers' gloomy forecasts of their shipments for the fourth quarter, which, in turn, may cause the sector's revenue for the quarter to contract 10-15% from the third quarter.

In September, some vendors informed contract manufacturers of their decisions to cut the outsourcing. Contract manufacturers like Vanguard International Semiconductor Corp. (VISC) have begun revising downward their October results after seeing their revenues hit the year's high in September.

Industry watchers pointed out that the market for LCD drive ICs has begun slowing down since September after experiencing peak seasons in the second and third quarters fostered by LCD-panel makers building up hefty inventory backlogs.

Now the chip vendors are watching closely market sentiment after mainland China's weeklong October national holidays. The mainland's economic stimulus package introduced in the first quarter this year was the major driver behind the boom of the panel market over the past two quarters.

Industry watchers estimate VISC's output for the fourth quarter to drop 15-20% in light of rising inventories at mainland China's suppliers of LCD TVs and monitors.

What is plaguing VISC has also hit chip packaging and test houses specializing in LCD drive IC like Chipbond Technology Co., Ltd., which saw revenue lose at monthly rate of 2.2% to NT$626 million (US$18.9 million at US$1:NT$33) in September. Despite the monthly contraction, the company saw its revenue for the third quarter surge 40% from the second quarter to reach NT$1.87 billion (US$568 million).

As the fourth quarter is normally a tepid season for LCD drive IC packaging and test industry, industry watchers estimate Chipbond's revenue for the fourth quarter to dwindle 15-20% from the third quarter.